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Many Chains Struggle, But Not P.F. Chang's
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From During a recession, making macaroni and cheese for dinner instead of heading to the Macaroni Grill is a no-brainer. And so the vast casual-dining sector, which grew fat during the late free-spending consumer boom, has been getting hammered. Restaurants are the top category in which U.S. consumers said they are most likely to cut back, according to a recent Boston Consulting Group survey. "Casual dining is getting hit hard," says BCG partner Catherine Roche. The higher up on the food chain you are, the worse it is. Sales at the upscale Morton's steakhouse fell 24 percent in the first quarter of 2009. But at least one comparatively pricey restaurant chain is turning in the equivalent of a Michelin-starred performance.

P.F. Chang's China Bistro, whose two restaurant chains - P.F. Chang's and Pei Wei Asian Diner - are staples of upscale malls and mixed-use developments, said that same-store sales fell a bit but profits produced at its 350 outlets rose 38 percent from the first quarter of 2008. Operating margins - the holy grail of any business - at P.F. Chang's 190 stores rose from 12.8 percent to 14 percent, largely because of "incremental operational improvement opportunities. The stock has doubled since November."

What accounts for the sizzle in P.F. Chang's wok? Probably not the food. Just as saxophonist Kenny G provides jazz for people who don't really like authentic jazz, P.F. Chang's peddles Chinese food to diners who might not cotton to authentic Sichuan fare. Waiters don't wheel around carts laden with steamed chicken feet as they do at dim sum parlors in New York and San Francisco. In the comfy confines of Boston's Prudential Center, I was presented with a raft of desserts as American as, well, apple pie, including the Great Wall of Chocolate. "It's like The Cheesecake Factory, only ethnic," says Jennifer 8. Lee, author of The Fortune Cookie Chronicles: Adventures in the World of Chinese Food. "It's very consciously designed to cultivate an appeal to mainstream America." The "P.F." stands for company founder Paul Fleming, and the kitchen features ingredients that wouldn't be found in Chinese restaurants, such as chocolate, cheese, and melon balls. (Try picking up fruity spheroids with chopsticks.)

P.F. Chang's rode the trading-up boom of this past decade, opening stores in tony malls and economic hot zones and becoming the first Chinese-food chain to reach $1 billion in revenue. But the days when you could simply open the doors and welcome consumers armed with credit cards and cash from mortgage refinancings are over.


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